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Jump-Starting Renewables

One of the best ways to understand how to bring about a hydrogen fuel economy quickly enough to halt global warming in a timely manner is to compare it to the development of wind energy in the late 1970s and early 1980s.

A number of us had been working very hard to bring about a wind energy revolution, with little success. Looking back, I noticed that nothing lasting happened until five strategic elements fell into place. Then, suddenly, 15,000 wind turbines were spinning in California in one of the fastest sustained developments of a new industry in peacetime. Since most of the actual development occurred during the Reagan administration, which was hostile to renewables, it is possible that only these five elements are necessary. Maybe they are both the necessary and sufficient conditions for an environmentally benign industry like a hydrogen economy to come into being.

In 1973 America experienced a great gasoline and fuel oil shortage due to an OPEC embargo. Prices went high and supply diminished. From the beginning of the oil crisis there was tremendous public awareness of the promise of wind energy and great public support for it. Because of this we had political support, a willingness in Washington, D.C. and California to encourage wind and solar energy by both tax incentives and changes in regulations. We had high-priced competition?oil prices were high and everyone expected they would continue to rise for a decade or so. But America had very little good wind energy technology. Several companies had designed prototype wind turbines, but in 1978 few American turbines could withstand a serious wind for any length of time. Finally, apart from $530 million that DOE put up for individual giant wind machines, there was no capital on which to build a wind energy industry.

In short, what kept a wind energy industry from blossoming was lack of technology and capital. This was our chicken-and-egg problem: no technology because no capital; no capital because no technology.

In 1978 the federal government created a tax credit for any individual purchasing a wind turbine, and the State of California passed an even more generous state tax credit. As a result, nearly $2 billion in capital was taken out of the speculative California real estate market and put into the hands of American wind turbine manufacturers and California wind farm developers. This sudden flow of capital then drew to Calif-ornia more seasoned and reliable wind-turbine technology from Denmark's wind energy companies, who were suffering for lack of a market. Within the six-year lifespan of the California tax credit, the world wind energy industry went from a standing start to become the fastest growing energy industry in the world; it has continued to be the fastest ever since.

The wind energy industry required five elements before it could take off: (1) public awareness and support; (2) political support, especially for incentives; (3) high fossil fuel prices; (4) good technology; and (5) sufficient capital. Once all five elements were in place, nothing could stop it.

When we compare the situation of wind energy in 1978 to hydrogen energy in 2001, we find that a piece is missing, but it is a different piece this time. We have a range of good technologies, although needing some work and refinement. Wall Street has made commitments of billions of dollars of capital. We have high fossil fuel prices and expectations of them continuing. There was DOE support for research and political encouragement from the previous administration. (For the moment there is no White House support for hydrogen.) But, most surprisingly, what is almost completely missing is public awareness and support.

Public awareness and support was the strongest card in our hand in the 1970s. Today it is missing. Political support is also now weak, but with enough public awareness and vocal support for hydrogen energy, local and state government, and even Congress, can be expected to fall into line, passing the necessary incentives and regulations to overcome start-up inertia.

Once public awareness and support is strong, all five elements will be in place and the hydrogen era will zoom ahead.